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PenFed Mortgage Review: Competitive Rates with No Lender Fees


Today we’ll take a deep dive into a major credit union that’s also a sizable mortgage lender, Pentagon Federal Credit Union, or PenFed for short.

While originally intended to serve the U.S. military, veterans, and various defense department government employees, today anyone can join PenFed, whether part of those groups or not.

For example, if you have no military affiliation whatsoever, it’s possible to join if your employer is eligible or if you make a small donation to an organization.

PenFed has been around since 1935, and today serves more than two million members worldwide with a whopping $25 billion in assets.

They lend in all 50 states and the District of Columbia, as well as in Guam, Puerto Rico, and Okinawa. Let’s learn more.

PenFed Mortgage Fast Facts

  • Members-only credit union federally insured by NCUA
  • Founded in 1935, headquartered in Alexandria, Virginia
  • Anyone free to join regardless of lack of military background
  • Offer checking and savings accounts, credit cards, mortgages, and HELOCs
  • Licensed to lend in all 50 states, D.C., Guam, Puerto Rico, and Okinawa
  • Funded $18.9 billion in home loans last year
  • Did about a fifth of total loan volume in home state or Virginia
  • Also operate a wholly-owned title insurance company called PenFed Title, LLC and real estate brokerage called PenFed Realty

As noted, anyone can join PenFed, though they are a members-only credit union. So once you become a member, you can take advantage of their many product offerings, including home mortgages.

Last year, the Alexandria, VA-based credit union did roughly $18.9 billion in total home loan origination volume, with about a fifth of it in its home state of Virginia.

A good chunk was also originated in the nearby states of Maryland and Florida, along with Texas and faraway California.

Home purchase loans accounted for roughly 50% of volume, with 25% rate and term refinances, almost 20% cash out refinances, and the remainder HELOCs.

And while most of their home loans were fixed-rate mortgages, they offer a variety of adjustable-rate mortgages as well.

How to Apply for a Home Loan with PenFed Mortgage

  • Members can submit their loan application directly from their account on PenFed Online
  • They ask that you call them or submit a call back request online if refinancing or inquiring about a HELOC
  • Those looking to generate a pre-approval can do so right away via the online portal
  • They offer a digital mortgage loan experience that allows you to complete most tasks electronically

Assuming you’re a PenFed member, it’s possible to get the ball rolling simply by calling them up directly or by filling out a short call back request form on their website.

If you’re looking for a mortgage pre-approval for a home purchase, you can also begin on your own via the PenFed online portal.

Speaking of real estate, PenFed operates an affiliated real estate brokerage known as PenFed Realty, which is backed by Berkshire Hathaway HomeServices.

Like many other banks and lenders, PenFed offers a digital mortgage experience where you can eSign disclosures, scan and upload documents, receive real-time status updates, and check loan progress 24/7.

PenFed also operates its own title insurance company, which might speed up the loan process and/or result in discounts on such services.

Loan Programs Available at PenFed Mortgage

  • Home purchase loans
  • Refinance loans (rate and term and cash out)
  • Conventional loans backed by Fannie Mae and Freddie Mac
  • Jumbo loans up to $5 million loan amounts
  • VA loans for eligible military and veterans
  • Home equity lines of credit (HELOCs)
  • Various fixed-rate and adjustable-rate options available

PenFed offers both home purchase financing and refinance loans on a variety of property types, including single-family homes and condos/townhomes, along with multi-unit properties.

It’s possible to finance a primary residence, second home, or investment property using a conventional loan backed by Fannie Mae and Freddie Mac, or a jumbo home loan that exceeds the conforming loan limit.

They also specialize in VA loans seeing that they were originally geared specifically toward military and veterans.

While they don’t offer FHA loans or USDA loans, which is a major downside for some borrowers, they do offer a home equity line of credit (HELOC) product, with the possibility to tap equity up to 90% CLTV.

PenFed pays most of the closing costs on the HELOC, and will waive the $99 annual fee if $99 in interest is paid during the preceding 12-month period.

The only caveat on that product is if you pay it off or close it within 36 months you’ll need to reimburse the full amount of the PenFed-paid closing costs for the loan.

PenFed also offers some unique proprietary loan programs like their 15/15 ARM or their 5/5 ARM if you’re looking for something a little different.

And they offer traditional ARMs like the 5/6 ARM and 7/6 ARM, along with the usual fixed-rate options like a 30-year and 15-year fixed.

PenFed Mortgage Rates

One nice thing about PenFed is the fact that they openly advertise their mortgage rates for all to see on their website.

You don’t need to sign in to see their rates – simply surf over to their site to see today’s rates on a variety of products including conventional fixed-rate loans, jumbo fixed-rate loans, and VA loans.

They don’t advertise their ARM rates so you’ll either need to click on “Get My Rate” to generate your own mortgage rate quote on their website or call in for pricing if you want an adjustable-rate mortgage.

From what I saw, their mortgage rates were competitive, especially since they say they don’t charge lender fees.

Additionally, those purchasing a home get a lender credit ranging from $500 to $2,500 depending on loan amount, which can be used to offset any third-party closing costs like the home appraisal or title insurance.

All in all, PenFed’s mortgage rates seem competitive and the lack of lender fees makes them even more desirable when you consider the mortgage APR.

PenFed Mortgage Reviews

They have a rather marginal 3.8-star rating out of 5 on Zillow, though it’s only based on about two dozen customer reviews. Still, it leaves a lot to be desired.

Similarly, they have a 3.9-star rating out of 5 on WalletHub from a much larger sample size of about 6,000 reviews, but that may include non-mortgage related products.

However, quite a few seem to focus on their mortgage or home equity products, so you’ll be able to read about relevant customer experiences.

It’s the same story over at Bankrate, a 3-star rating from eight reviews. Again, not a lot there, but still seems to be consistent with other ratings sites.

While they aren’t a Better Business Bureau accredited company, they do currently have an ‘A+’ BBB rating based on complaint history.

But their customer reviews on the BBB website are rather poor, with a 1.2-star rating on 75 reviews at last glance.

So it seems they’re struggling a bit in the customer satisfaction department, despite having a solid website, competitive mortgage rates, and no lender fees.

PenFed Mortgage Pros and Cons

The Good

  • They openly advertise their mortgage rates which appear to be competitive
  • Don’t charge lender fees
  • Lender credit specials on home purchase loans
  • Can apply for a mortgage online via digital process
  • Offer lots of home loan programs including home equity products
  • Jumbo loan amounts as high as $5 million
  • Free mortgage calculators on their website
  • They service their home loans

The Maybe Not

  • Limited number of branches if you don’t live by a base
  • Do not offer FHA loans or USDA loans
  • Mediocre reviews from past customers

(photo: Wiyre Media)

2 thoughts on “PenFed Mortgage Review: Competitive Rates with No Lender Fees”

  1. I am a PenFed member. What benefits are available for people selling their home? Any price reductions in commissions?

  2. Gayle,

    Not sure if they offer any benefits to home sellers, but they do offer lender credits to members who take out a home purchase loan.

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